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Project portfolio management
Project Portfolio Management (PPM) is the centralized management of processes, methods, and technologies used by project managers and project management offices (PMOs) to analyze and collectively manage a group of current or proposed projects based on numerous key characteristics. The objectives of PPM are to determine the optimal resource mix for delivery and to schedule activities to best achieve an organization’s operational and financial goals ― while honouring constraints imposed by customers, strategic objectives, or external real-world factors. Different open source and commercial technology software can provide a critical, enabling platform for PPM. The PPM market Organizations can find PPM relevant if they have multiple projects and resources that require a formalized framework for tracking, allocating, and managing them effectively. When deployed, these capabilities can serve two distinct audience sub-segments: # execution-focused PPM users, who manage the tactical details of project execution, with the reporting tools to communicate progress and expenditures back to business sponsors and to executive management. # project portfolio-level PPM users, who create project-related decision frameworks, selecting specific projects based on those frameworks, planning the delivery of those projects or investments, tracking those investments at a high level, and reporting on those activities Capability Definition A PPM solution should support a majority of the following five knowledge areas * Portfolio Strategic Management * Portfolio Governance Management * Portfolio Performance Management * Portfolio Communication Management * Portfolio Risk Management This definition has been widely adopted and has led to the commoditization of the PPM software industry. The PPM software market has significantly matured, strengthened by the introduction of software-as-a-service PPM as a viable deployment option alongside traditional and hosted options.Smith, Aaron (June 24, 2011), ProjectsAtWork.com Key Capabilities PPM provides Project Managers in large, project-driven organizations with the capabilities needed to manage the time, resources, skills, and budgets necessary to accomplish all interrelated tasks. It provides a framework for issue resolution and risk mitigation, as well as the centralized visibility to help planning and scheduling teams to identify the fastest, cheapest, or most suitable approach to deliver projects and programs. Pipeline Management This is the determination of whether (and how) a set of projects in the portfolio can be executed by a company with finite development resources in a specified time. Fundamental to pipeline management is the ability to align the decision-making process for estimating and selecting new capital investment projects with the strategic plan. Resource Management The focus on efficient and effective deployment of an organization’s resources where and when they are needed. These can include financial resources, inventory, human resources, technical skills, production and design. In addition to project-level resource allocation, users can also model ‘what-if’ resource scenarios, and extend this view across the portfolio. Change Control The capture and prioritization of change requests that can include new requirements, features, functions, operational constraints, regulatory demands, and technical enhancements. PPM provides a central repository for these change requests and the ability to match available resources to evolving demand within the financial and operational constraints of individual projects. Financial Management With PPM, the Office of Finance can improve their accuracy for estimating and managing the financial resources of a project or group of projects. In addition, the value of projects can be demonstrated in relation to the strategic objectives and priorities of the organization through financial controls and to assess progress through earned value and other project financial techniques. Risk Management An analysis of the risk sensitivities residing within each project, as the basis for determining confidence levels across the portfolio. The integration of cost and schedule risk management with techniques for determining contingency and risk response plans, enable organizations to gain an objective view of project uncertainties Enterprise Project Portfolio Management Enterprise Project Portfolio Management (EPPM) is the practice of taking a more integrated and top-down approach to managing all project-intensive work and resources across the enterprise. This contrasts with the traditional approach of combining manual processes, desktop project tools, and ‘best-in-breed’ PPM applications for each project portfolio environment. Evolution of PPM In the early 2000s, many PPM vendors realized that project portfolio reporting services only addressed part of a wider need for PPM in the marketplace. Another more senior audience had emerged, sitting at management and executive levels above detailed work execution and schedule management, who required a greater focus on process improvement and ensuring the viability of the portfolio in line with overall strategic objectives. In addition, as the size, scope, complexity, and geographical spread of organizations’ project portfolios continued to grow, greater visibility was needed of project work across the enterprise, allied to improved resource utilization and capacity planning. Business Drivers for EPPM The PPM landscape is evolving rapidly as a result of the growing preference for managing multiple capital investment initiatives from a single, enterprise-wide system. This more centralized approach, and resulting ‘single version of the truth’ for project and project portfolio information, provides the essential transparency of performance needed by senior management to monitor progress versus the strategic plan. The key aims of EPPM can be summarized as follows: * Prioritize the right projects and programs: EPPM can guide decision-makers to strategically prioritize, plan, and control enterprise portfolios. It also ensures the organization continues to increase productivity and on-time delivery - adding value, strengthening performance, and ultimately improving bottom-line results. * Eliminate surprises: formal portfolio project oversight provides managers and executives with a process to identify potential problems earlier in the project lifecycle, and the visibility to take corrective action before they impact financial results. * Build contingencies into the overall portfolio: flexibility often exists within individual projects but, by integrating contingency planning across the entire portfolio of investments, organizations can have greater flexibility around how, where, and when they need to allocate resources, alongside the flexibility to adjust those resources in response to a crisis. * Maintain response flexibility: with in-depth visibility into resource allocation, organizations can quickly respond to escalating emergencies by maneuvering resources from other activities, while calculating the impact this will have on the wider business. * Do more with less: For organizations to systematically review project management processes while cutting out inefficiencies and automating those workflows and to ensure a consistent approach to all projects, programs, and portfolios while reducing costs. * Ensure informed decisions and governance: by bringing together all project collaborators, data points, and processes in a single, integrated solution, a unified view of project, program, and portfolio status can be achieved within a framework of rigorous control and governance to ensure all projects consistently adhere to business objectives. * Extend best practice enterprise-wide: organizations can continuously vet project management processes and capture best practices, providing exponential degrees of efficiency as a result. * Understand future resource needs: by aligning the right resources to the right projects at the right time, organizations can ensure individual resources are fully leveraged and requirements are clearly understood. EPPM software also allows an organization to establish complete project capacity at any point in time. Project Portfolio Optimization A key result of PPM is to decide which projects to fund in as near an optimal manner as possible. Project Portfolio Optimization (PPO) is the effort to formally make the best decisions possible under these conditions. References Further reading * * * * * Fister Gale, Sarah (2011), Prepare for the Unexpected: Investment Planning in Asset-Intensive Industries, Economist Intelligence Unit. * See also * Aggregate project plan * Comparison of project-management software * Project management * Project management software * Project management simulation Category:Information technology management Category:Project management Category:Portfolio theories